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EX. 10.1
FIRST AMENDMENT TO AGREEMENT
THIS FIRST AMENDMENT TO AGREEMENT ("AMENDMENT") is made of the 21st day
of July, 1999, between KEYCORP, an Ohio corporation ("KEY"), and [NAME OF
EXECUTIVE] (the "EXECUTIVE") and modifies the Agreement between Key and the
Executive that was originally entered into as of the ___ day of _____________,
199_ to encourage the Executive's continued attention and dedication to the
Executive's duties in the potentially disruptive circumstances of a possible
Change of Control of Key (the "AGREEMENT"). Capitalized terms used in this
Amendment and not otherwise defined herein have the meanings ascribed to them in
the Agreement.
Key has determined that it will be in the best interests of Key and its
Subsidiaries to enter into, and to make the changes provided for in, this
Amendment.
Key and the Executive agree, effective as of the date first set forth
above, to amend the Agreement, and the Agreement is hereby amended, as follows:
1. LUMP SUM PAYMENT UNDER SECTION 1.1 INCREASED FROM 2 1/2 YEAR
EQUIVALENT TO THREE YEAR EQUIVALENT. Section 1.1(a) of the Agreement is hereby
amended to read in its entirety as follows:
"(a) LUMP SUM PAYMENT. Key shall pay to the Executive, within 30
business days after the Termination Date, a lump sum severance
benefit equal to three times the sum of (i) one year's Base
Salary (at the highest rate in effect at any time during the
one year period ending on the date of the Change of Control)
plus (ii) Average Annual Incentive Compensation; and"
2. LENGTH OF "SECTION 1.1 BENEFIT PERIOD" EXTENDED TO CONFORM TO CHANGE
MADE BY SECTION 1 OF THIS AMENDMENT. For all purposes of the Agreement, the
length of the "Section 1.1 Benefit Period," which is defined in the second
sentence of Section 1.1(b) of the Agreement, is hereby extended from thirty
months to three years by deleting from that second sentence the phrase:
"For the period beginning on the day after the Termination Date and
ending thirty months, to the day, after the Termination Date"
and substituting in its place the phrase:
"For the period beginning on the day after the Termination Date and
ending on the third anniversary of the Termination Date"
3. CERTAIN COMPENSATION GUARANTIES ADDED TO AGREEMENT. The following
new Section 1A is hereby added to the Agreement to add certain compensation
guaranties to the protection to be afforded to the Executive after the
occurrence of a Change of Control:
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"1A. CERTAIN COMPENSATION GUARANTIES DURING TWO YEARS
FOLLOWING A CHANGE OF CONTROL. For so long as the Executive remains in
the employ of Key or one of its Subsidiaries during the period
beginning on the day after any Change of Control and continuing through
the second anniversary of that Change of Control (the period of the
Executive's employment during such two year period being herein the
"Guaranteed Compensation Period"), the Executive shall be entitled to
the incentive compensation guaranty set forth in Section 1A.1 and to
the equity compensation guaranty set forth in Section 1A.2.
1A.1 GUARANTEED LEVEL OF INCENTIVE COMPENSATION. Except as
provided in (c) below (which provides for a forfeiture of unpaid
amounts if the Executive's employment is terminated for Cause) and the
last sentence of (a) below (which provides for a potential reduction in
amount if based on overall corporate or applicable business unit
performance), Key shall cause the Executive to receive, during the
Guaranteed Compensation Period, as incentive compensation, an amount
that, on an annualized basis, is at least equal to the Executive's
Average Annual Incentive Compensation. The guaranty set forth in the
immediately preceding sentence (the `Incentive Compensation Guaranty")
establishes a minimum amount of incentive compensation that must be
paid to the Executive with respect to the Executive's employment during
the Guaranteed Compensation Period. Except as otherwise provided in
(a), (b), or (c) of this Section 1A.1 below, the guaranteed incentive
compensation for the Guaranteed Compensation Period shall be paid to
the Executive quarterly in arrears, within 30 days after the end of
each calendar quarter, for each quarter (or portion thereof) during the
Guaranteed Compensation Period.
(a) If and to the extent the Executive, together with
similarly situated executives of Key, is a
participant in one or more bona fide incentive
compensation plans during the Guaranteed Compensation
Period, Key may defer payment of guaranteed incentive
compensation payable under this Section 1A.1 up to
the amount of the target award for the Executive
under that incentive compensation plan (provided,
however, if the compensation cycle under the
incentive compensation plan includes time periods
outside the Guaranteed Compensation Period, the
deferral shall be up to a proportionate amount of the
target award) until such time as payments are
regularly scheduled to be made under that incentive
compensation plan, at which time Key shall pay the
deferred amount plus any other amount, if any, to
which the Executive is then entitled under that plan
that has not been earlier paid. (This could result in
a guaranteed payment being made after the end of the
Guaranteed Compensation Period, for example, where
the compensation cycle under the incentive
compensation plan ends after the end of the
Guaranteed Compensation Period). Notwithstanding the
foregoing, if Key, in administering a bona fide
incentive compensation plan in which the Executive
participates, in good faith and without
discriminating against the Executive, establishes or
utilizes a factor which is
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intended to reflect or rate for the compensation
cycle in question either the corporation's overall
performance or the overall performance of the
business unit in which the Executive works and that
performance factor is uniformly applied (either in
establishing an incentive compensation pool or
against each participant's target) to similarly
situated officers as the Executive, Key may elect to
apply that performance factor against the target
award for the Executive under the incentive
compensation plan in question and, if applying that
factor reduces the Executive's target award, the
amount of guaranteed incentive compensation payable
under this Section 1A.1 which has been deferred under
this paragraph (a) on account of the incentive
compensation plan in question may be reduced by the
same amount (or, if the compensation cycle includes
time periods outside the Guaranteed Compensation
Period, the reduction shall be by a proportionate
amount).
(b) If the Executive's employment terminates for any
reason other than Cause, all unpaid guaranteed
incentive compensation with respect to the Guaranteed
Compensation Period shall be paid in a lump sum
within 30 business days following the Termination
Date.
(c) If the Executive's employment is terminated by Key
for Cause, Key shall not be required to pay to the
Executive any amount of incentive compensation on
account of the Incentive Compensation Guaranty that
was not required to have been paid before the
Termination Date.
1A.2 GUARANTEED PARTICIPATION IN EQUITY BASED
COMPENSATION PLANS. During the Guaranteed Compensation Period,
the Executive shall participate fully (and at a level at least
substantially equivalent to that of comparable senior
executives of Key) in each and every stock option, stock
appreciation, or similar equity based plan in which similarly
situated executives of Key and its Subsidiaries generally
participate. The guaranty of full participation set forth in
this Section 1A.2 is hereinafter sometimes referred to as the
"Equity Compensation Guaranty.""
4. EXPANSION OF TRIGGER FOR THREE YEAR EQUIVALENT BENEFIT. The grounds
upon which the Executive may terminate employment and become entitled to receive
the lump sum payment provided for in Section 1.1(a) of the Agreement are
expanded to include a failure by Key to satisfy either or both of the Incentive
Compensation Guaranty and/or the Equity Compensation Guaranty by adoption of the
following amendments:
4.1 "REDUCTION OF COMPENSATION" SUBSTITUTED FOR "REDUCTION OF
BASE SALARY" IN SECTIONS 1.1 AND 1.2. Sections 1.1 and 1.2 of the
Agreement are hereby amended by deleting the term "Reduction of Base
Salary" from the first sentence of Section 1.1 and from the last
sentence of Section 1.2 and substituting therefore, in each such
location, the term "Reduction of Compensation."
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4.2 "REDUCTION OF COMPENSATION" DEFINED. The following
definition is hereby added to the Agreement as new Section 7.11A:
"7.11 REDUCTION OF COMPENSATION. A "Reduction of
Compensation" shall have occurred in any one or more of the following
occurs:
(a) a Reduction of Base Salary
(b) following notice by the Executive to Key and
an opportunity by Key to cure, Key fails to
satisfy the Incentive Compensation Guaranty;
or
(c) following notice by the Executive to Key and
an opportunity by Key to cure, Key fails to
satisfy the Equity Compensation Guaranty.
For purposes of clauses (b) and (c), Key will be deemed to
have had an opportunity to cure and to have failed to effect a
cure if the failure to satisfy the Incentive Compensation
Guaranty or the Equity Compensation Guaranty, as the case may
be, persists (as determined in good faith by the Executive)
for more than seven calendar days after the Executive has
given notice to Key of the existence of that failure."
5. CONFORMING AMENDMENT MADE TO DEFINITION OF "GOOD REASON". The
original clause (b) of Section 7.9 of the Agreement, pursuant to which an
exclusion of the Executive from full participation in certain compensation plans
would constitute "Good Reason," is hereby deleted from Section 7.9 and that
section is amended to read, in its entirety, as follows:
"7.9 GOOD REASON. The Executive shall be deemed to have "Good
Reason" to terminate the Executive's employment under this Agreement
during a Window Period if, at any time after the occurrence of a Change
of Control and before the end of the Window Period, either or both of
the events listed in clauses (a) and (b) of this Section 7.9 occurs
without the written consent of the Executive:
(a) following notice by the Executive to Key and an
opportunity by Key to cure, the Executive determines
in good faith that the Executive's position,
responsibilities, duties, or status with Key are at
any time materially less than or reduced from those
in effect before the Change of Control or that the
Executive's reporting relationships with superior
executive officers have been materially changed from
those in effect before the Change of Control; or
(b) the headquarters that was the Executive's principal
place of employment before the Change of Control
(whether Key's headquarters or a regional
headquarters) is relocated to a site outside of the
greater metropolitan area
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in which that headquarters was located before the
Change of Control. (If the Executive's principal
place of employment before the Change of Control was
neither at Key's headquarters nor at any regional
headquarters, then this clause (b) shall not be
applicable).
For purposes of clause (a), Key will be deemed to have had an
opportunity to cure and to have failed to effect a cure if the
circumstance otherwise constituting Good Reason persists (as determined
in good faith by the Executive, whose determination shall be
conclusive) for more than seven calendar days after the Executive has
given notice to Key of the existence of that circumstance."
6. AMENDMENT MADE AS CONTEMPLATED BY AGREEMENT; AGREEMENT REMAINS IN
FULL FORCE AND EFFECT. This Amendment is made by Key and the Executive in
writing and in the manner contemplated by Section 6.8 of the Agreement. Each of
Key and the Executive hereby confirms that, except as amended by this Amendment,
the Agreement is and remains in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
KEYCORP
By
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Robert W. Gillespie
Chairman of the Board and
Chief Executive Officer
THE "EXECUTIVE"
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[NAME OF EXECUTIVE]
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